Deals

ProBuild's Owner Preparing to Put Dealer Up for Sale, Sources Say

Offer memorandum could be ready by year's end

The
owner ofProBuild, the nation's
largest full-service lumberyard, is taking formal steps to sell the
company, numerous sources have told ProSales.

Devonshire Investors has hired Credit Suisse to create documents regarding a
proposed sale that could be circulated to potential buyers starting as early as
this month, said the sources, all of whom spoke confidentially. The sources
include lumberyard CEOs, investment bankers, private equity firms, and
consultants. Many of them are intimately familiar with ProBuild's operations.

Asked about the rumors, ProBuild president Robert Marchbank told ProSales in an
interview Dec. 9 that the company doesn't comment on market speculation about
its business. He did stress, however, that "ownership is very pleased with
the progress we’ve made and the direction we’ve outlined in terms of core
products. ... They're committed to the business plan that we’ve put
forward, both in the coming year and for our three-year plan."

Devonshire Investors is the private investment arm of FMR LLC. FMR also is the parent of Fidelity Investments,
America's second-biggest mutual fund company. Devonshire provided the bulk of
the funding and much of the vision that led to the creation of ProBuild in 2006
by merging the Strober Organization--a New Jersey-based dealer it had acquired
in 1997--with the Seattle area's Lanoga Corp. The newly created, Denver-based
ProBuild finished that year with $6 billion in sales, 506 facilities from
Florida to Alaska, and 17,000 employees.

Then the housing crash came and overwhelmed the company, nearly halving its
revenues in just three years. It is believed to have posted many hundreds of
millions of dollars of losses over the years, but the exact amount of those
losses isn't known publicly. One of the few glimpses into the company's
finances came in November 2009, when ProBuild confirmed a Reuters report that
said Devonshirehad
spent $345 millionjust to cover six
months' worth of losses at the dealer and might have to pay another $105
million through January 2010 to buttress the operation.

Devonshire's support enabled ProBuild to survive while fellow giants Stock
Building Supply and Building Materials Holding Corp. underwent Chapter 11
bankruptcy-law reorganizations. By 2013, ProBuild had recovered to $4.3 billion
in sales, but it had roughly 90 fewer branches and 7,000 fewer employees than
at its peak. It also had gone through 18 months of self-analysis that led it to
conclude it needed to organize itself better and put more emphasis on local
decision-making. "We kept trying to put ProBuild on the jersey of
everybody and make everybody look the same, but what we began to realize is
we’re not all the same," Marchbank told ProSales in anexclusive interviewFeb. 5 during the
International Builders' Show.

There was unconfirmed speculation that Devonshire has been considering a move regarding ProBuild for several months. News that a formal offer memorandum may be
in the works implies a sale could be in the offing.

About the Author

Craig
Webb is editor-in-chief of REMODELING and PROSALES. He has worked as a
professional journalist since 1972 in newsrooms from Indiana to Italy for
leading news organizations such as The Wall Street Journal, United Press
International, McGraw-Hill, and—since 2006—Hanley Wood. Follow him on Twitter at @craiglwebb.